U.S. Democratic presidential candidate Joe Biden speaks during a campaign rally in Toledo, Ohio on October 12, 2020.
Rebecca Cook | Reuters
Democratic presidential candidate Joe Bidens According to a new analysis, the tax plan would allow average earners an average tax cut of $ 620 while top earners would face a sharp increase.
The analysis released by the Tax Policy Center on Thursday is based on duel claims made during the campaign over whether Biden would raise taxes for the middle class. The analysis found that the bottom 80% of taxpayers, on average, would see tax cuts, largely due to a package of tax credits and deductions for the middle class.
According to the analysis, tax cuts for those in the lower quintile, which include those earning less than $ 25,000, would average $ 750 in 2022. Those in the next quintile who earn between $ 25,000 and $ 50,000 would see a tax cut of $ 790. Those in the middle who earn between $ 50,000 and $ 89,000 would see a tax cut of $ 620, while those who make between $ 89,000 and $ 160,000 would see a decrease of $ 420.
The top earners, on the other hand, would see a steep increase. Those in the top 1% who earn more than $ 788,000 would see an average tax increase of $ 266,000, while the super-earners – or those in the top 0.1% – would see an average tax increase of $ 1.6 million.
Biden has said that no taxpayer earning less than $ 400,000 a year would see a tax hike under his plan.
Republicans have claimed that 82% of Americans would see higher taxes under Biden’s plan. Some analysts say some would be borne by the workers as Biden has proposed raising the corporate tax rate from 21% to 28%. As a result, some midsize taxpayers would see an effective decrease in their after-tax earnings.
However, the Tax Policy Center’s analysis found that for at least the early years of the tax plan, the effects of the corporate tax hike would be more than offset by tax credits and deductions for middle and low income individuals.
However, by 2030, when certain tax credits and other provisions expire, some middle-income taxpayers would see slight tax increases. The group found that middle earners would see an average tax increase of $ 70 in 2030, while those earning between $ 89,000 and $ 160,000 would see an average tax increase of $ 400.
The former Vice President’s plan also wouldn’t bring as much revenue as originally expected, partly due to the slowing economy. Independent experts initially said the plan would raise more than $ 3 trillion, but the Tax Policy Center now says it would increase tax revenue by $ 2.4 trillion.
It said it lowered its revenue forecast due to the weaker economy, expected delays in passing tax changes due to the coronavirus pandemic, and additional middle-class tax provisions and loans.